BBA-RO

MERCHANDISING
Assignment

Roll No:520967890
Name:SANJITH KRISHNA C R
Centre Code:2760
Module Code:CA0004
 BACHELOR OF BUSINESS ADMINISTRATION IN
RETAIL OPERATIONS-BBA-RO SEMESTER 1
CA0004 – MERCHANDISING I - 2 CREDITS
(BOOK ID: B0734)
ASSIGNMENT SET- 1
30 MARKS

1. a. What are the features and benefits of merchandising?

The sample catalogs demonstrate several merchandising features.

Prebuilt kit
The apparel sample catalog contains one example of a prebuilt kit: the Women's top category
page shows a Tank top and skirt set prebuilt kit.
The hardware sample catalog contains one example of a prebuilt kit: the Power Drills subcategory
page shows a Hammer drill and small angle grinder prebuilt kit.
The housewares sample catalog contains two examples of prebuilt kits: the Tea-Party Starter Kit
and the Set-the-Table Stemware Kit, both in the Tableware category.
Bundle
The apparel sample catalog contains a Casual pants and belt bundle on both the Men's and New
arrivals top category pages.
The hardware sample catalog shows a circular saw with electric sander bundle on the
Woodworking category page.
The housewares sample catalog contains two bundles: the Jump-Start-Your-Morning Coffee
Bundle in the Kitchenware category and the Stemware Convenience Bundle in the Tableware
category.
Cross-sell
The apparel sample catalog contains four examples of cross-sells as follows:

 Classic belt with plain front cotton pants on the top-category Men's page
 Relaxed fit 5 pocket cotton pants with classic belt on the top-category Men's page
 Tank top with classic skirt on the Women's top-category page
 Classic skirt with tank top on the Women's top-category page

The hardware sample catalog contains an example of a cross-sell on the Power Drills category
page: a cross-sell of a hammer drill with a circular saw is offered.
The housewares sample catalog contains a number of cross-sell instances. For example:
 A Coffee and Espresso Bar is suggested to go with a Classic Blue-Fabric Roll-Arm Love Seat (in
the Furniture category).
 A 5-Piece Silverware Set is suggested to go with a "Havenwood" Dinnerware Set in the Tableware
category.
 An Olive Oil Gift Set is suggested to go with a Classic Frying Pan in the Kitchenware category.

Up-sell
The apparel sample catalog shows an up-sell on the New Arrivals page. The up-sell is Plain front
cotton pants with relaxed fit 5 pocket cotton pants.
The hardware sample catalog contains one example of an up-sell. The Power Grinder category
page up-sells a Small angle grinder with drywall screwdriver.
The housewares sample catalog contains three examples of an up-sell:

 From a Student's Desk to an Executive Six-Drawer Desk (Furniture category)

 From a 5-Piece Silverware Set to a 5-Piece Everyday Silverware Set (Tableware category)
 From a Classic Frying Pan to an Ultra-Deluxe Frying Pan (Kitchenware category)

Accessory
The apparel sample catalog contains one example of an accessory: Men's category page Walking
shorts with sport socks is offered as an accessory.
The hardware sample catalog contains one example of an accessory. The Woodworking saws
category page offers an electric sander with the purchase of a circular saw.
The housewares sample catalog contains ten instances of the accessory association, such as a
Banker's Desk Lamp for an Executive Six-Drawer Desk and a Modern Occasional Table for a White
Fabric Roll Arm Sofa.

Replacement
The housewares sample catalog offers a Black Swing-Arm Lamp in place of a Brass Adjustable
Desk Lamp.

e-Marketing Spot
The apparel sample catalog shows one example of an e-Marketing Spot: a Tank top and Team
shirt e-Marketing Spot is shown on the shopping cart page.
The hardware sample catalog shows one example of an e-Marketing Spot. The Shopping cart
page shows a Hammer drill and circular saw e-Marketing Spot.
The housewares sample catalog provides an e-Marketing Spot that displays context-sensitive
promotional information in the side bar of every page and an e-Marketing Spot displayed on the
Shopping Cart page.
benefits of merchandising

Cost Efficiencies - A merchandise program allows you to gain better pricing based on the orders
of larger quantities being placed. The products in the range are generally ordered for the year's
forecast which means even though you only needed a few items for a staff golf day, you benefit
from the best pricing possible and able to purchase small quantities at a cheaper price due to
economies of scale.

Consistency & continuity of brand on all products- How annoying is it when printers, offices and
other staff members take your brand into their own hand and decide the logo would look great in
Hot Pink or lime green instead of working within the brand guidelines and using your PMS
references and thread colours. Creative promotions is as protective of your brand as you are.
Your brand will be consistent across all products ensuring the logo is used correctly at all
times. All manufacturing and production is heavily quality checked to ensure no anomalies arise
as brand integrity is paramount.

Speed to market- Just found out the conference is next week and you have nothing on hand? This
situation will never occur with a catalogue program in place. You will be alerted when stock is
running low of any product and orders will be placed to top up. Avoid costly RUSH fee's that are
added by some companies when you absolutely positively have to have it overnight or within a
week. By having your goods in stock, you will be able to order at short notice knowing that you
have branded merchandise available. Metro deliveries are normally received within 24 - 48
hours.

Control Of your marketing budget-where the products are going, who has access, who is on your
vendor list! With access to live stock on hand, you can access accurate up to the minute reports
on who is ordering, what quantities are being ordered and where they are going. Make your
marketing measurable! Orders can also be monitored by cost centre or division. Authorising of
orders can also be put in place.

Space- Although you probably do not think of it, where are your products held? Are you paying
for unneccessary storage of materials. Is somebodies desk or office full of merchandise that
keeps disappearing slowly? Keep everything in one place! Free up that office for the new starter
to assist with bringing in the dollars instead of watching the cash deplete. Not only can we
produce your merchandise and print, but if you have stock previously manufactured, we can
validate your stock into the warehouse and combine everything under one roof so that there is no
more waste.
 Custom Design-With creative promotions, you also gain access to custom designed products at
smaller order quantities due to larger stock holdings

Reporting-Keep the CFO smiling with reporting on stock levels, stock movement, ordering trends
and counts. All can be accessed either electronically or sent to you monthly or quarterly or upon
request

b. What do you mean by visual appe al of a store?

The personality of a person is judged by the way one dress himself. Similarly the
ambience of the store is judged by the way it has been displayed to the customer. The
visual merchandiser needs to make sure that his store is the best compared to the rest
in terms of visuals created within the store. He needs to be very creative when it comes
to display, understand products, the market trend, and fashion updates, colour themes,
to create stories within a set of merchandise, and upgrade his visual displays from time
to time. You tend to learn a lot in merchandising if you are associated with a store
dealing in apparels.
Merchandising is the art of displaying merchandise in an organised manner so as to
offer the right quantity of the right merchandise in the right place at the right time.
Visual merchandising is the art of presenting the merchandise in such a way that it
appeals a customer and attracts him to touch and feel the merchandise. It educates the
customer and helps him in the buying process.

Visual merchandising is one of the tools used by retailers to communicate with

customers.

Roles of VM:
Visual merchandising is not just about displaying products on windows. It has a major
role during promotional activities of a product, or launch of a new brand. It enhances
the product and the brand value whilst segmenting and targeting the market,
positioning the brand in the market, and by serving customers. It helps to communicate
to the customer new arrivals inside the store, the range of merchandise, the arrival of a
new trend, the price of the product, and its features. It also helps in announcing the
arrival of new seasonal and occasional products.

Usage of VM:
Visual merchandisers take the help of visual merchandising in their showrooms, and
malls, to build awareness among the customers.
 They use visual merchandising in their stores to make the merchandise more attractive
and desirable to a customer to buy them in the store. It helps them to introduce their
new product launch and to explain about the product details. It helps to showcase the
store’s merchandise assortments, variety of collections, and various brands... It helps
to build the overall image of the store.

Understanding Visual merchandising in a retail store:

The following categories are used by a visual merchandiser within a store to showcase
the various collection of merchandise-

*Windows
*Exterior
*Interior
*Remote

2. a. Give a note on the growth of category management .

Category management is a retailing concept in which the range of products sold by a retailer is
broken down into discrete groups of similar or related products; these groups are known as
product categories (examples of grocery categories might be: tinned fish, washing detergent,
toothpastes).

Each category is run as a "mini business" (business unit) in its own right, with its own set of
turnover and/or Profit targets and Strategies. Introduction of Category Management in a business
tends to alter the relationship between Retailer and Distributer (Business) instead of the
traditional adversarial relationship, the relationship moves to one of Collaboration, with exchange
of information, sharing of data and joint business building.

The focus of all supplier negotiations is the effect on turnover of the category as whole, not just
the sales of individual products. Suppliers are expected, indeed in many cases mandated, to only
suggest new product introductions, a new Planogram or promotional activity if it is expected to
have a beneficial effect on the turnover or profit of the total category and be beneficial to the
shoppers of that category.

The concept originated in Grocery (mass merchandising) retailing, and has since expanded to
other retail sectors such as DIY, Cash and Carry, Pharmacy etc.

The industry standard model for category management is 8-step process, or 8-step cycle
developed by the Partnering Group.

The eight steps are shown in the diagram on the right; they are :
 1. Define the category (i.e. what products are included/excluded).
2. Define the role of the category within the retailer.
3. Assess the current performance.
4. Set objectives and targets for the category.
5. Devise an overall Strategy.
6. Devise specific tactics.
7. Implementation.
8. The eighth step is one of review which takes us back to step 1.

The 8-step process, whilst being very comprehensive and thorough has been criticized for being
rather too unwieldy and time-consuming in today's fast-moving sales environment; in one survey
only 9% of supplier companies stated they used the full 8-step process. The current industry
trend is for supplier companies to use the standard process as a basis to develop their own more
streamlined processes, tailored to their own particular products

Market research company Nielsen has a similar process based on only 5 steps:

Rreviewing the category, targeting consumers, planning merchandising, implementing strategy,

evaluating results.

b. What are the elements of exterior store atmospherics?

These are the exterior store atmospherics

• Atmospherics: a store's physical characteristics that are used to develop a retail unit
image and draw customers

• Describes the physical elements in a store's design that appeals to consumers and
encourages them to buy

• Classified in terms of exterior and interior atmospherics

3. Explain the merchandise planning execution.

we can split the planning process into four logical sections

 Review
 Merchandise planning
 Range planning
 Space planning
Review

The review process consists of two separate activities. Firstly we carry out a Pre-Season Review of
performance history to identify opportunities and problems. Secondly we "normalise" it. Normalisation
is the process of looking at history and ironing out the "bumps" to make it useful as a basis for
planning.

Merchandise Planning

The first element in the merchandise plan is the Strategic Plan. This is normally high level, with
perhaps a five year timescale. It is used to set the critical success factors for merchandising in terms
of sales, margins & stocks. Next we would create a Channel Sales Budget. This would allow us to take
into account the effect of new channels, new stores, closures and refits. Once complete we would
create a Category Level Margin Plan. Here we are creating a weekly version of the strategic plan at
category level for sales, margins and markdowns.

We are now starting to get input from the individual merchandisers, and gap analysis between these
plans and the strategic plan will ensure that we stay on course. At the same level we create a
Category Level Weekly Sales, Stock & Intake Plan. It is here that we create our Open to Buy, normally
the first significant win in the implementation of a planning system. These category level plans create
the box within which the range plan will be created

Range Planning

We begin here with the Assortment Plan. In this plan we break down the goals of the merchandise
plan into specific lines, or sometimes SKUs. The system should be capable of extending the results so
that we can see the effect on overall margin mix, for example, of a change in cost price of an item.

Once the assortment plan is underway we can start Distribution Planning. The lines that we plan are
here given a distribution profile. From this we should be able to see both which stores a line is ranged
to, and which lines a given store will receive. The link between available physical space and ranging
done here is a key determinant of merchandise performance.

In the ideal world we would now create a Line Level Weekly Sales, Stock & Intake Plan This would be
the category level W.S.S.I., broken down by line to provide a detailed forecast of sales and stock
requirements. However, volume & time constraints means that this may be for key items only.

At a basic level this provides us with the means to monitor and react to consumer demand

At a more sophisticated level this provides us with the hard currency that can make efficient consumer
response systems function effectively. The advent of e-commerce is going to increase the value and
importance of line level forecasts shared with our suppliers.
There is another sort of assortment plan emerging now. This is the Graphical Range Plan. This sort of
plan moves out of the purely numeric type of planning that has been used up until now and starts to
allow the range to be put together in a visual way. Typically digitally stored images are manipulated
into collage type storyboards.

Space Planning

Space planning systems can be split into two types - numeric and visual. Numeric planning systems
simply allow users to take account of space available and to calculate ratios like return on space.
Visual systems allow users to create 3 dimensional walk-through models of the stores and to preview
the look of a store once ranging decisions have been made.

These are the easy way to executing a merchandising plan according to Chin Gang CEO Seven eleven
Singapore.

MERCHANDISING
Assignment
 BACHELOR OF BUSINESS ADMINISTRATION IN
RETAIL OPERATIONS-BBA-RO SEMESTER 1
CA0004 – MERCHANDISING I - 2 CREDITS
(BOOK ID: B0734)
ASSIGNMENT SET- 2
30 MARKS

1. a. What are the visible features of in-store merchandising in retail?

An artistic appearance of a store to attract budding customers into a store is what visual
merchandising is all about. Colour scheme used in a store often attracts the attention of the
consumers. Just as a logo creates a recall, attractive colours attract potential clientele. Visual
merchandising grabs the attention of the consumers in less than five seconds. Laying an emphasis
on the sensible use of colour is an effective way to turn the customer’s attention to your store

For example, red is an attention grabbing colour and signifies energy, love, danger etc. It implies different
emotions used in different context. When used commercially, red signifies brightness and catches the attention.
Pink is associated with femininity whereas brown and green evoke a sense of nature and ecology. A retailer
should have a keen understanding of these associations. To create a connection of the brand name with the
colour is what a retailer should aim at. The colours of your store need to effectively attract the customer’s
attention. Visibility is a primary factor behind selecting these colours. Red and yellow, being the brightest of
shades, create a quick recall in a person’s mind.

Enhances brand’s popularity

A retailer although, should be cautious when using bright shades like hot pink or red for his store. He
can run a risk of making the store look gaudy and bright which can fail the purpose of attracting
positive attention. A colour should be used in sync with its correct tone to aptly convey the retailer’s
message to the consumer. Colours create a stronger recall than catchy taglines, as they create an
association with your product which makes it easier for the customer to remember and relate to. The
purple and red of a Café Coffee Day outlet will be visible from quite a distance away even if the
name is not visible to the eye. Thus, the association which a brand creates with the colour makes its
visibility in an already crowded market area much stronger.

Creative colours
Majority of the retailers concentrate on the colour scheme of their store targeting to showcase his
products and capture the consumer’s attention. Colours are an effective and powerful tool and help
create an association with a product which the customer remembers for a long time. An aesthetic
colour scheme always has a pleasing effect, and a retailer must use the colour scheme creatively to
enhance his store’s benefit.
 Creative design

Store Interial design is one of the other features of store merchandising. When customer’s shopping
automatically customers will catch the design in their mind. If the design is catching on their mind
that means catching their future business for long time

b. Highlight the three methods of analyzing merchandising performance.

Measuring the performance of merchandise is necessary in order to gain an understanding

of the products which have performed well and which have not performed as per the
target. The performance can be as per plan, below the plan or above the plan.

Inventory turnover, which may also be called inventory or merchandise stock turn or just
turnover, is a key to merchandise performance. Inventory turnover measures how long
inventory is on hand before it is sold. Items that are on hand a short time have a high
turnover those that are on hand longer having a low turnover.

Retailers calculate inventory turnover in several ways:

1) Net sales /average inventory at retail

2) Cost of merchandise sold / average inventory at cost

3) Units sold /average units in inventory

4) Net sales = turnover * average inventory at retail.

5) Average inventory at retail = net sales /turnover

Turnover is a key to high performance, which means profits in retailing. However, higher
turnover will not indefinitely increase profits, and the lowest profits, and the lowest
turnover will not necessarily result in the lowest profits.

Rapid turnover enables the retailer to reduce certain expenses. Lower inventories will
obviously require less capital, and thus the retailer’s interest expenses will be lower. Also
associated with lower inventories will be lower levels of insurance coverage required, lower
inventory taxes on year end inventories and lower cost of space to store the inventory.
On the other hand, rapid turnover can increase expense. With similar average inventories
on hand, the retailer must order more frequently and in smaller quantities, resulting in
higher clerical costs, lost quantity discounts and higher transportation rates.
Success in retail can be measured by the amount of profit generated in relation to the
working capital invested i.e. the return on investment. Certain costs in any business are
fixed or at least are not easily flexed. Shop rents and head office costs fall into this
category. Merchandise margins and product mix, however, are variable and their
management can either enhance or destroy profitability.

Many retailers use the performance indicators of gross margin % (after markdown) and
weeks cover to measure performance. These are very commonly available but used in
isolation from each other, they are of limited value. Gross margin % gives us a measure
of reactive profitability without taking into account the costs of stockholding investment.
Weeks cover tells us how effectively we turned our stock without informing us about
relative profitability.

There are three methods of analyzing merchandising performance:

1) ABC analysis

2) Sell through analysis

3) Multiple Attribute method.

ABC Analysis: Pareto (ABC) Analysis (a.k.a 80/20 Rule)

ABC analysis rank orders merchandise by some performance measure to determine which
items should never be out of stock, which items should occasionally be allowed to be out
of stock and which items should be deleted from the stock selection. An ABC analysis
can be done at any level of merchandise classification form SKU to department.

ABC analysis utilizes the 80:20 principles which imply that 80% of the sales come from
20% of the products. The first step in the ABC analysis is to rank order SKU’s using
one or more criteria. The most important performance measure for this type of analysis is

Contribution margin:

Contribution margin: Net sales – Cost of goods sold – Other variable expenses

The next step is to determine how items with different levels of profit or volume should
be treated differently. The buyer may define as A items those that account for 5% of
items and represent 70% of sales. B items represent 10% and 20% of sales. C items
account for 65% of the SKUs but contribute only 10% of sales and D as those items for
which there were no sales in the past season.

Sell through Analysis:

A sell through analysis is a comparison between actual and planned sales to determine
whether early markdowns are required or whether more merchandise is needed to satisfy
 demand. There is no rule which can determine when a mark down is necessary. It
depends on experience with the merchandise in the past, whether the merchandise is
schedule to be featured in advertising or whether the vendor can be reduce the buyers
risk by providing markdown ,money etc.

If actual sales stay significantly ahead of planned sales, a reorder should be made.

Multiple attribute Method:

This method uses a weighted average score for each vendor. The following steps are
followed:

1) Develop a list of issues to consider for decision making, like vendor reputation,
service merchandise quality, selling history etc.

2) Give importance weights to each attribute

3) Make judgments about each individuals brand’s performance on each issue.

4) Combine the importance and performance scores

5) Add all to arrive at the brand scores.

2. a. Differentiate between the roles of buyer and merchandiser.

Merchandiser is a person who gets converted inspiration into Business, use technology to
conceptualize and address the planning, production, promotion and distribution of products in the
various industries to meet the consumer needs and demands

Buyer is One who purchases goods or services; also called customer. A consumer
makes purchases for his or her own use or purpose. A professional buyer
makes purchases on behalf of a retailer or w holesaler . Buyer is person who buys
the product or service for his own use or purpose .
b. Point out the growth of modern retail fro m its traditional background?

TRADITIONAL MODREN

No category management Shoppingis easy because category

(less choice) management have
(lots of choice)

Retailer getting product from wholesaler Retailer getting product directly from
(Wholesaler is a mediator so price will be manufacther
more) (No mediator, that means product price will
be less)

Paying by cash paying by cash or credit card /debit card

(No motive to buy the products) (cards are a motivation to buy the products )

Shopping ATMOSPHIRE is not so good, Shopping ATMOSPHIRE is good, products

products are not so fresh if compare with are fresh
modern retail (Directly from manufacther so supply time
very less, so products are fresh )
3. Elston has a retail stores. During the weekends, his sales volume increases so
much that he is unable to meet all the customer’s needs. As a result, some of his
customers are dissatisfied and don’t return until the next weekend. Elston is
thinking about planning and executing a new merchandising strategy. Please help
him in this task.

Elstons has to implements a morden merchandising strategy to maintain the customer

relationship with his regular customers

To satisfy the full need of the all customers Elstons has forecast the next weekend sales with the
last weekend sales volume. Applying of these strategies can make the shopping more comfortable

Door Delivery: it can reduce the customers crowed inside the retail shope.

E Sales: selling the Elston products through online is better Idea. From this he can reduce the
crowed in the shope as well as he can increase the sales volume

PRE SALES Brochure with Order slip: issuing products brochures with an after the reading of
brochures customers can Order the products through the order slip and give it back to the sales
wing.

Forecasting the business :Which are the products last week he doesn’t have in his shope that
things he has to keep the stock before the sales period.

Promotions on Week Days: Giving discounts on the week days is better way to reduce crowed
on the weekend (customer won’t wait for weekend to buy the products)

And of course Elstons has to expand the sales wing to satisfy more customers.